Bitcoin price fell below USD 30,000 this week. Because of this decline, El Salvador saw an opportunity to buy the downside. The country's president has no "paper hands" and, in addition to this purchase, shows the new plan of Bitcoin City - a city at the foot of a volcano entirely dedicated to Bitcoin.
El Salvador, the South American country known as the first bitcoin nation, recently stated that it took advantage of this drop in bitcoin price. More specifically, it was announced that another 500 BTC were acquired at an average price of $30,744 per coin, for a total value of approximately $15.4 million. This brings the country’s total purchase to around 2000 bitcoins.
El Salvador relies on DCA
The entire cryptocurrency market has been in the red this week, with all tokens down more than 10%. The market continues to decline following the US Federal Reserve's monetary policy announcement last week. Bitcoin has also been approved as legal tender in the Latin American country, a decision that the International Monetary Fund (IMF) and other international organizations have advised against.
Efforts to stem the tide of rising inflation in El Salvador began in September 2021 with the introduction of BTC as legal tender. As the king of coins became legal money in the nation, it acquired a significant portion of the most valuable cryptocurrency. When it comes to acquiring bitcoin, El Salvador takes a “buy the dip” approach. If the price of bitcoin falls, the president declares that additional bitcoin will be added to the country's reserve currency fund.
Since El Salvador made BTC legal tender, it's been the country's cheapest purchase to date. Bukele believes that "some people are selling really cheap," supporting his long-term goal of widespread Bitcoin adoption given the current market sell-off.
El Salvador is fully committed to Bitcoin
The country's decision to adopt BTC as its official currency is not the only step the country has taken to boost the country's economy. President Bukele previously stated that his goal is to make El Salvador the most bitcoin-friendly nation.
It was also recently announced that the country is preparing to issue its much-anticipated Bitcoin Volcanic bonds. The money generated from the bonds would be used to build the world's first bitcoin city. However, the release date of the bonds has already been postponed several times.
The residents of El Salvador do not (yet) accept Bitcoin
It is also unfortunate for the President that the residents of El Salvador are not happy to switch to Bitcoin and use the Chivo wallet. A few weeks ago, news broke that 60 percent of the country's residents dropped the Chivo wallet after receiving the free $30 upon signup.
In addition, companies operating in El Salvador are in no hurry to accept Bitcoin. Only 20% of all companies currently offer payments in Bitcoin. There are even reportedly companies that used to accept BTC but have now stopped doing so and gone back to basics.
There hasn't been a breakthrough with taxes either. Only 5% of all El Salvador residents have chosen to pay their taxes with the Chivo wallet.
The low adoption rate is most likely related to the volatility of Bitcoin coupled with the technical complexity of using the Chivo wallet. This is especially difficult for older people.
Bitcoin City
The President posted some photos of Bitcoin City on Instagram. It is said to be a city that is being built right next to a volcano. The goal is to run them entirely on bitcoin and get most of the energy from the volcano.
Before we show these pictures, let's take a look at the plans that were shared on November 21st. In it we see the shape of the city and the facilities that Bitcoin City will contain.
Bukele estimated that the entire project will cost around 300,000 bitcoins. At the Bitcoin price at that time – a few days after the previous all-time high – that was a whopping 15.3 billion euros. This price is currently around 9 billion euros.
That's still a high amount despite the fall in price. To finance this, Bitcoin bonds are issued, the proceeds of which go to this project. Half of it is used for mining infrastructure and the other half for buying and storing bitcoin. For those interested: These bonds are expected in September.
What are the plans?
In the photo Bukele shared, we see a model of the city. It's sort of a circle with a big bitcoin square in the middle. Despite the Bitcoin price falling, he seems happy to share the images of the city. “Bitcoin City looks beautiful. And the airport too," the president said on his Instagram page.
So it will also be possible to fly to Bitcoin City. The official end date has not yet been announced. In the pictures in the message we see, among other things, a kind of stadium and other buildings that will populate the city.
President Bukele boasts on Twitter
El Salvador recently replenished its bitcoin reserves by purchasing 500 BTC at a cost of around $30,000. This purchase has already enabled the country to turn a profit. The country's president didn't hesitate to brag about it on his Twitter account.
According to the Twitter post, the country's balance increased to $1 million in just 11 hours right after the bitcoins were bought. As President Bukele boasted about the successful deal, Twitter users have reported that the country is down a staggering $20 million due to the average purchase price of around $45,000. Bukele said on Twitter:
"I could sell these coins right now and make almost a million dollars in just 11 hours, but of course I'm not doing it."
Because Bitcoin's average purchase price is high, El Salvador won't be in the green until the largest cryptocurrency's price has risen by about 40%. In September, the country started buying bitcoin when BTC was trading for around $50,000.
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